Phoenix City Employees' Retirement System made direct hedge fund investments of $60 million each to Carlson Capital's Double Black Diamond Fund and Fir Tree Partners' Value Fund, both global macro funds.
The $2.2 billion pension fund's board approved the investments at its April 17 board meeting, said Greg Fitchet, investment officer, in a telephone interview.
About $75 million of the funding will come primarily from the liquidation of the pension fund's $100 million long/short equity portfolio managed by K2 Advisors. The board terminated the manager in November following the recommendation of investment consultant R.V. Kuhns & Associates to restructure its 15% absolute-return allocation to include direct investments in multistrategy hedge funds. The rest of the funding will likely come from long-only equity managers; Mr. Fitchet said no managers would be terminated.
The other $25 million of the K2 liquidation was added to Pacific Alternative Asset Management's hedge fund-of-funds portfolio, giving the manager a total of $130 million.
R.V. Kuhns assisted.